SME Times is powered by   
Search News
Just in:   • Equity indices break two-day losing streak on value buying  • IMF urges Sri Lanka to tighten monetary policy  • Global semiconductor sales to reach $676 bn this year: Gartner  • Tinna Rubber hits upper circuit, investors accumulate 900% returns in year  • Availability of jobs in Japan improves for 1st time in 3 yrs 
Last updated: 25 Oct, 2016  

gst-thmb.jpg GST hurdles

   Top Stories
» Net direct tax collection reaches highest-ever figure in FY 22
» Musk has to manufacture here to sell Tesla cars in India: Gadkari
» Round tripping of industrial inputs by large players unfavourable to local value chains
» Sitharaman engages investors in Silicon Valley
» Modi hails India's success in achieving target of $400 billion of exports
Bikky Khosla | 25 Oct, 2016
The third meeting of the GST Council ended last week without making much headway. After the first two meetings of the Council, things had appeared to be on track. Even the opening day of the third meeting looked promising, but differences soon started cropping up and the Council had to end its meeting abruptly on the second day, a day earlier than scheduled, without reaching a decision on the rates structure. This development is worrisome. The Centre has set an April 1, 2017 target for the launch of a nationwide GST, and now the target only seems to get tougher.

In the third meeting, the Finance Ministry has proposed a four-slab GST structure -- 6% for essential goods, 12% for merit goods, 18% standard rate and 26% for demerit goods -- and there is near-unanimity on this among the states. But the  Centre also wants to impose a cess over and above the GST on ultra luxury and demerit goods in order to finance compensations to the states for losses due to shift to the GST regime -- a proposal which, according to some states, amounts to using GST funds for compensation. They demand that the compensation should be paid out of the Consolidated Fund of India.

Many view that the central government, by proposing a multi-slab GST structure, has turned the whole concept of simplified tax regime upside down. Multiple slabs will lead to more complications and higher compliance and administrative costs. It is also pointed out by some experts that the proposed cess on ultra-luxury and sin goods does not go well with the original idea. GST is supposed to subsume cesses and hence the proposal is conflicting.  Also, it is not acceptable to many that the Centre would have absolute powers in future to alter the cess rate without consultation with the states.

Most of us have remained enthusiastic supporter of GST based on the primary assumptions that it would simplify the muddled up tax system by introducing a uniform rate of tax and also that the tax rate would be low so as to minimize the regressive character of the indirect taxes the GST is replacing. Also, we expect this path breaking tax reform to herald a new era in India's cooperative federalism. There might be some compromises, but they must not be at the cost of the very soul of GST. The GST Council is scheduled to meet again on November 3-4, and I hope that positive results will come out of this meeting.

I invite your opinions.
Print the Page Add to Favorite
Share this on :

Please comment on this story:
Subject :
(Maximum 1500 characters)  Characters left 1500
Your name:

Multi tax system is essential for next 10 years
Bhagawath Prasad | Sun Oct 30 14:02:03 2016
In my opinion , multi tax system must prevail as our country consists of different income groups and also developed and underdeveloped areas , therefore multi tax system must continue for a while , at least for next 10 years ,common general public usage usage goods and services must have lowest tax slab , those fall under luxury and used by high income groups must have highest tax slab, while all business to business goods and services must have one uniform mid-range tax rate for easy transaction and transportation between state borders.

A.Pravin | Fri Oct 28 07:39:15 2016
There Should be Two type Tax systems. One is National( Common to all States) and other one is for Export...

Kumar raja Shanmugavel | Fri Oct 28 03:36:36 2016
Please don't make GST too complicated.Have just 3 types(Essential,General,Luxury).Keep excess cess also within this.

GST - old wine in a new bottle
R Chandrasekaran | Thu Oct 27 05:21:17 2016
Looking all the discussion, it looks like bringing the old wine in a new bottle. Let the new structure should have open system without additional cess or any other hidden charges which will kill the purpose of common GST.

Status of exempted goods
Ajay | Wed Oct 26 22:03:02 2016
In GST what will be the status of goods exempted under VAT. eg books, cloths, etc.

Fully agree
Shanker Sharma | Wed Oct 26 18:42:58 2016
You are absolutely right, Mr. Editor And I fully agree with your views.

T.S.SUNDAR RAJ | Wed Oct 26 13:56:55 2016
If the classification of goods is such that for my company, input goods and outgoing products come under different slabs, then what is the difference between present system and hyped GST?

GST hurdles
Chandrasekharan | Wed Oct 26 13:09:57 2016
The very objective of uniform rate of taxation has been defeated by introducing again multiple tax rates & Cess on top of that. Hope November 3-4 meeting strongly object this conflicting proposals and the very idea of GST is maintained in the best interest of the nation and the trade in general. Rate of GST should be kept low, say 6 to 10% maximum for most of the items & services and a suitable higher rate can be fixed for on ultra luxury and demerit goods. Such a step will certainly encourage all concerned to make tax payments promptly and collection of tax revenue also will meet government expectation, when the rate of tax is comfortable for the trading community and consumers in particular.

M.K. Verma | Wed Oct 26 12:24:11 2016
We we are talking about GST , I feel that should be one tax for every item. Not in four-slab structure -- 6% for essential goods, 12% for merit goods, 18% standard rate and 26% for demerit goods. Four slab will like as good as today running structure. This would be only one tax for every item.

Tax burden - it is going to be on the reverse
Sasikanth S | Wed Oct 26 09:31:50 2016
Modi government is hurry to ensure high level salaries for the government ministers including president. He forget India being a hungry death country... Through GST, we hoped reduced tax burden, however, practically it is going to be on the reverse. Precisely this country is becoming a difficult place to live...

Long cherished dream
Pawan Choudhary, Cuttack | Wed Oct 26 08:35:06 2016
I hope of positive outcome at next GST council meeting scheduled to be held on 3rd Nov. It is a long cherished dream awaited in indirect Tax system of India.

SHIRISH NENE | Wed Oct 26 08:17:20 2016
Government is hell bent on making GST should have been as simple as VAT. Does government really wants the bill to pass ?

A.Santhanam | Wed Oct 26 07:47:10 2016
The multiple forms such as C Form, ARE1/CT3, ARE3/CT3, Form H, Form I etc shall be abolished. There shall not be any concessional rate of taxes such as CST at 2% against form C etc. The rate of tax shall not be differentiated by Luxury and non luxury, essential and non essential and etc.

Reg:service tax
Sathish | Wed Oct 26 06:47:21 2016
In this tax structure where it is accomplished service tax

Three tax slabs
Bharat Raut | Wed Oct 26 06:41:14 2016
Only three tax slabs. Essential,Gen and Luxury(6%,15% and 40% resp.). No further complications and sub-additions.

GST Hurdles- pitfalls of differential slab
Radhakrishnan Mundoli | Wed Oct 26 06:26:03 2016
Having a single slab was originally proposed. However, having differential slabs will bring in complications. A product having different components, when assembled & comes as a product can fall into a very different slab altogether. The scheme will then work similar to an excise duty scheme. Having a cess on top is complicating the situation. Why do we have to always complicate things instead of adopting a simplified system.

Including petroleum in GST
Sameer gandhi | Wed Oct 26 06:23:19 2016
Without including petroleum products in GST the whole purpose of GST is negligible. All industries, all households, malls or any trader consumes petroleum product at large.

Sans low rate, SMEs will suffer
Vithal Olambe | Wed Oct 26 05:20:21 2016
I noted points described in third meeting of GST council. If there is no any simplification in taxes then small scale units will destroy completely from India. There is need to reduce rate of taxes then only small people will stand in market otherwise there is no use of GST and political commitment of "achhe din".

GST on IMPORTS: Need clarification
Rengasamy Karunaigiri | Wed Oct 26 05:14:41 2016
I would like to know that after implementing the GST, whether imports will be exempted from GST and continue with existing rate of Customs and CVD Cess or any changes will be there. Because it is not clear to any one about taxation applicable part for local and imports. Need better clarification. More over 26 % for Non merit goods is very high. If the rate of tax will be maximum 18% will be really good. Otherwise again the cost will get increase to make inflation.

Old wine in new bottle
Bhupendra Madhiwalla | Wed Oct 26 05:14:10 2016
State Sales Tax and CST are to be replaced by GST. Multiple slabs and categories remain. Old wine in new bottle. GST will not replace all indirect taxes, such as octroi, profession tax which individual states and municipalities will have to tackle on their own.Most states are bankrupt with heavy debts. No hope of simplified structure and procedure. Live with Status Quo.

Sushil Aggarwal | Wed Oct 26 05:03:41 2016
It's good knowledge

Why multiple rates
Bidhan Kumar Sarkar | Wed Oct 26 05:01:17 2016
If the Govt. says 'one country one rule' then why so many slabs in GST. It should be one rate for all type of goods.

A. P.Ayyappan | Wed Oct 26 04:43:00 2016
Food,Medicine,utensils, Education service tax , to be tax on lowerside.

Better to have only Two types (domestic items & commercial items) of GST taxes
Mruthyunjaya Eshwarappa | Wed Oct 26 04:38:14 2016
It is better to have two type of taxes (GST's). List out all the materials in two categories and make one of the list should be taxed is about 8-10% on domestic products, 20-26% should be applied for commercial items. Better to go with two types of taxes.

Make GST simpler
GRK MURTHY | Wed Oct 26 04:19:44 2016
Let the GST be more simpler and tax payer friendly. It should not complicate the system.

Multiple rates make sense
Dharm Bir Singh Longia | Wed Oct 26 04:19:23 2016
Above story gives good update on the progress of GST. In my opinion the country like India which has disparity of income and where there is not guarantee of employment, the finance minister proposal of having slab rate for different kind of products make sense. Ultra ultra luxury and demerit goods must have higher tax then essential goods.

Many new project held due to uncertainty
Manish Agrawal | Wed Oct 26 04:13:18 2016
So many investors who are ready to invest in new projects are in dilemma and due to uncertainty a huge investment and employment is getting delayed. It should be finalized with clear means and with original fundamentals.

Only two rates of GST
Kuldeep Kumar Singh | Wed Oct 26 04:06:34 2016
There should be only two rates of GST. One on Indian Products One on Non Indian Rates that will be easy to stop tax stealing and further lower tax rate would attract every small business man to come ahead.

GST - Playing with data
Praveen kulkarni | Wed Oct 26 03:57:04 2016
The Central and State Govt's have data and are not making it public. If the present system with so many concessions, subsidy, tax incentives by all the state and central govt shall be made public. How tax evasion is taking place shall also be made public. How tax on tax, C form challenges etc shall be made public. Upon making such issues public, then, there are many intellectuals outside the parliament and assemblies and they will be able to suggest the best method and rates to balance the budget income and such huge pilferages happening. The Accelerated depreciation ( a tax evasion tool for profit making company, if it invests in Solar power, the amount of such AD taken shall be made public for the past 10 years....This will be an eye opener as to why India made rich as rich and why India did not create Entrepreneurs due to such tax evasion policies...Consuming states will not have any problem if such transparent numbers are opened to public and these so called secretaries and Finance ministers will be ashamed at the suggestions and solutions, which will be offered only after such transparent data sharing an also upon hearing the Government views...Transparent data sharing is very important for the success of GST implementation...

GST slab
Narayan Avhale | Wed Oct 26 03:44:16 2016
It was being proposed only 18% then the new proposal 6% for essential goods, 12% for merit goods, 18% standard rate and 26% for demerit goods -- and there is near-unanimity on this among the states. Such type of multilevel taxes are then only be the repetition of earlier taxes with rate revision & new name. This will lead to increase the cost of all item instead of lowering it. I am proposing the taxes as under.. 1. 6% to all essential item & daily need items, merit goods. No taxes on agricultural product basically vegetables & grains, ediable oil. 2. 12% service charges -all types -no variation. No education cess, agri cess turnover charges etc. 3.18% standard items & demerit & luxurious item. 4. INCOME \ PROPERTY TAX applicable to all those who have net income / sales turnover more than Rs. 5/- lac per annum

Movement of Goods from Manufacturing States to Non-Manufacturing States
Muralidharan S | Wed Oct 26 03:31:14 2016
Movement of Goods from Manufacturing States to Non-manufacturing States - do they provide special benefits to the Manufacturing State in this GST regime? What will happen to 2% CST (with C-Form)? This was the benefit the manufacturers / traders were enjoying when they had CST registration in VAT regime.Do you think the status quo will be maintained in this. If they talk about multiple tax structure in the GST, the very purpose for simplifying tax structure is negated.

GST Council's meeting outcome
S. Saravanan (Magee Exports) | Wed Oct 26 03:29:52 2016
Yes, I concur with the Author of this article. If the Centre introduces earstwhile multi-layer rates and cess as well, I think there is nothing any difference between earlier indirect tax structure and GST. Yes, it may lose its very sole/nature and even India nay not have its hold in international market. Singapore has the unified single GST rate of 7%.

BOMBAY SURGICAL CO | Wed Oct 26 01:58:26 2016
We are into import of Hospital Furniture and Equipment, If IMPORT DUTY will not covert into GST than higher Slab of GST will make are product more expensive . We suggest that IMPORT duty should be fully or partly reclaimable or should be refundable in GST Payment.

Jawahar | Wed Oct 26 15:06:24 2016
Only basic duty will remain. Rest all components will be subsumed.

Multiple rates no reform
R.seetharamaiah | Wed Oct 26 01:17:38 2016
The multiple tax structure as proposed by the Finance ministry is no reform. This defeats the very essence of GST. Uniform rate is a must.

GST - slab system
Kodi | Wed Oct 26 00:26:30 2016
GST- Slab system is very dangerous.

Centre wants to extract as much money as it can
Sarvesh Gupta | Tue Oct 25 18:37:50 2016
The problem is that central government has become greedy and wants to extract as much money as it can without visualizing the after effects.The one main objective of GST is to curb wrong practices in Trade, if you have higher tax more will try to evade. My suggestion is keep max two slabs one for the commodities which can effect inflation and one for non essentials. More you classify more you will be in trouble in regulation. Government should focus more on its effectiveness by smooth implementation and checking evasion. If we succeed in stopping evasion revenue will be at least double, hence enough money to share and fund country growth.

  Re: Centre wants to extract as much money as it can
Krishnan T | Wed Oct 26 07:01:10 2016
I too agree, GST shall be Two slab Not more than that,ie items of Essential and Non essential, and make the people to pride in paying the tax and Owness of the Country in total.

  Customs Exchange Rates
Currency Import Export
US Dollar
UK Pound
Japanese Yen 58.85 56.85
As on 27 Apr, 2022
  Daily Poll
COVID-19 has directly affected your business
 Can't say
  Commented Stories
About Us  |   Advertise with Us  
  Useful Links  |   Terms and Conditions  |   Disclaimer  |   Contact Us  
Follow Us : Facebook Twitter